Country FilesEast & HornNairobi: The eastern gateway


Posted on Wednesday, 07 June 2017 16:12

Nairobi: The eastern gateway

By Mark Anderson, Edith Honan and Morris Kiruga in Nairobi

rsz nairobi 

Nairobi is coming of age as a crossroads between new investors and old money. But mounting pressure on infrastructure and a lack of housing must be addressed


At a Labour Day celebration in Nairobi’s central Uhuru Park in early May tensions were running high between the two men preparing to face off in the August elections to lead Nairobi. Just a few months before, the challenger from the ruling Jubilee Party, senator Mike Sonko, nearly started a brawl on the Senate floor with governor Evans Kidero, accusing him of an illegal land grab. 

In Uhuru Park, the two sat an arm’s length apart, separated by interior secretary Joseph Nkaissery. The image, with the stern-faced Nkaissary seemingly playing referee, went viral. The Kidero-Sonko match has Nairobi’s elite reeling. It was always clear that Kidero, the former head of Kenya’s troubled sugar giant Mumias, would have a strong challenge in his first re-election fight. Few expected Sonko, a flamboyant personality who travels in a gold-plated limo and insists that his personal fortune comes “from God”, to emerge as the challenger. 

City of hustle and hope

The next governor will be presiding over the city at a time of transformation and growth. Vast challenges await the next leader, chief among them the highest youth unemployment rate in the region and a dysfunctional transportation system. But Nairobi is also a city of hope and ambition. Cantankerous writers and poets vie for the public space with tech-savvy entrepreneurs, and nearly everyone has a ‘side hustle’ to bring in extra cash. City planners are trying some side hustles of their own, with new housing developments and satellite communities mushrooming up alongside newly built motorways.

President Uhuru Kenyatta sees Nairobi as a bridge between Asia and Africa. At China’s New Silk Road summit on 15 May, he spoke with excitement about Beijing’s mammoth infrastructure project, which will cost an estimated $3trn, to build land and sea links with Europe, the Middle East and Africa. “[It] gives our continent the opportunity to make a paradigm shift. Post-colonial Africa has been stuck in a rut,” Kenyatta said. 

For many in Nairobi, the real rut is the wildly inflated housing market that keeps half the population in slums that lack basic sanitation. Kidero’s message has been that he must continue the unfinished business of his first term, and that Sonko is not a serious alternative. “When I got in, Nairobi was in a hole,” Kidero told local media. “Nairobi is much better than when I came in. We are treating more [ill] people, we are collecting more garbage, services are a lot more expedited.” Kidero’s success in the August elections will hinge on how voters view his track record on promoting development and improving service delivery.

Kidero estimates the city loses more than $500,000 a day in productivity due to traffic and other transportation troubles. Part of the problem is the number of vehicles, which have more than doubled since 2012. And just 12% of the city’s land is covered with roads, while a city of Nairobi’s size should dedicate 30% of land to roads, according to a United Nations-commissioned study. 

Sonko, who is perhaps best known for supplying free ambulance and other services in Nairobi’s underserved slums through his Sonko Rescue Team, has been largely on the defensive in the campaign. “I think my opponents are trying to play a character assassination game,” he said in a recent TV interview, in which he acknowledged he had spent time in prison. He said he was neither a drug dealer nor a hooligan: “I want to tell Kenyans that my past shall not judge my present or my future.” 

Since Kenya underwent devolution – the 2013 elections marked the official launch – the Nairobi governor has become one of the most powerful jobs in the country, controlling a massive budget. Kidero comes from the opposition Orange Democratic Movement, and the governing Jubilee Party wants to take control of the powerful Nairobi seat. 

As Nairobi has grown wealthier, the demands of its people have also sharpened. And it might just be that Kenya’s main political parties, long seen as self-serving, might have to make some adjustments.  

Road to nowhere 

“When we talk about devolution, we used to talk about tall buildings and big highways, and there’s a growing sense that that’s just not enough,” Patrick Gathara, a cartoonist and political blogger, tells The Africa Report. 

And big highways are not for everyone. Sliding down a hill flanked by vendors selling vegetables and Chinese smartphones, a gaping road comes to an abrupt stop. Once completed, this road will link the Southern Bypass, Nairobi’s newest highway, to Ngong Road, an important thoroughfare that leads to dozens of glittering skyscrapers in the distant Central Business District. But for now, the road is blocked by a neighbourhood in Kibera, the largest slum in Africa. 

Here, in Makina Ward, a district of corrugated iron shacks that are home to about 3,500 people, Nairobi’s wealth gap is laid bare. The government’s attitude to its poorest citizens is simple, says Alex Nyambiga, 24, a long-time resident of Makina Ward who works as a clerk in a supermarket in a smart part of town. “They want us to leave so the road can pass,” he says. “They don’t care where we go.” Poor workers like Nyambiga pass wealthy bankers on their way to jobs in downtown offices and shops. Slums such as Kibera share a border with Ngong Road, the epicentre of the tech boom. 

Nairobi’s economy has been riding a wave of growth and Chinese loans. This has created a new middle class with new tastes. The search for well-paying jobs has led Kenyans to pour into Nairobi at a staggering rate. The city’s population has skyrocketed from around 500,000 at independence in 1963 to about four million. As a result, the neighbourhoods that make up Nairobi have sprouted since it was founded by British colonisers in 1899. The city was first created as a stop-over along a railway linking the port of Mombasa with Uganda. 

Eastleigh, an area designated by the British for Africans, grew into a bustling Somali trading hub after independence. Across town, in Parklands, the British built apartment blocks to house colonial administrators. After they left, Asian investors moved in. 

Building a tech boom

Among the lush green of the northern district of Muthaiga, the United Nations has its headquarters for Africa. As the city grew, the southern district of Kilimani became home to shiny multipurpose buildings where sleep-deprived programmers create new tech startups. Nairobi is East Africa’s commercial hub, making it an attractive destination for big businesses and organisations. More than 100 multinational corporations have their headquarters for Africa here. 

In a vast field on the outskirts of Nairobi, a ring fence and dozens of signs surround a 5,000ha piece of land. This is where Konza Tech City, which is to become ground zero of Kenya’s tech boom, is slowly being built. After a series of false starts, construction of the first phase, which the government says will house “early investors and innovators” finally began late last year. 

Bitange Ndemo, the former cabinet secretary for information technology, is the visionary behind the city. “Look at Facebook: from Harvard it had to go to Silicon Valley because the place is conducive,” Ndemo tells The Africa Report. “Ngong Road had become too expensive, not every startup would move there,” he says, referring to the former location of iHub, Nairobi’s tech incubator.

Among the frowning faces huddled in front of laptops at the new iHub office space in Kilimani, scepticism about Konza is common. Josiah Mugambi, an iHub director, says: “You’ll want people out of their own volition to come there and say: ‘I’m working from here because I want to be here.’” Plans to build a high-speed railway to central Nairobi would sweeten the deal for many tech workers, Mugambi says, but the questions of housing and schooling remain.

Construction mania

It used to be said of upwardly mobile Nairobians that they started off living in the far-flung, congested estates of Eastlands, then moved on to working-­class Langata before landing in Kileleshwa – the leafy, residential area that sits just beyond the Central Business District. As recently as a decade ago, parts of Kileleshwa were still thick with forests and dotted with bungalows inhabited by politicians and the newly wealthy. It was an aspirational neighbourhood for a city that was coming into its own. These days, the once-quaint district is packed with high-rise towers. Kileleshwa might as well be shorthand for the city’s housing construction mania – and the failure of public infrastructure to keep pace.  

Take Kikambala Road, just off Kileleshwa’s main Ring Road. Around 15 years ago, the street had about 15 single-family homes. Today, 10 of those properties have been replaced with apartment towers and three are now subdivisions with as many as nine single-family homes. No major infrastructure development has accompanied that building boom. Residents say their taps run dry about every two weeks, and a nearby transformer explodes periodically from overuse.

The biggest complaint is the traffic. The single-lane Ring Road is one of the nicer stretches of pavement in central Nairobi. It is renowned among cyclists in the city for being one of the only roads with bike lanes. But on weekday evenings it becomes a parking lot, and residents might sit in two to three hours of rush-hour traffic – or even more if it rains. 

Affordability is a major problem for Nairobi’s residents. Over the past decade, they have seen a 10-fold increase in housing prices. According to the World Bank, there are just 25,000 mortgages outstanding in Kenya – in part because the informal nature of the economy shuts out many qualified borrowers. Meanwhile, there is little housing available, forcing the less privileged to either rent sub-standard homes or find housing outside the city. 

“There is a dearth of housing below the luxury market, and even the middle class cannot find affordable options,” says Mehnaz Safavian, lead financial sector specialist at the World Bank’s regional office in Nairobi. 

If there is limited housing for middle-­income earners, the problem is dramatically worse for roughly half of the Nairobi population, who are living in slums. The World Bank estimates that Kenya needs to build two million homes to stem the growth of slums. For a low-income buyer, who might be looking for something in the region of $20,000, “nothing exists”, says Safavian. 

And yet, one needs only to drive through a neighbourhood like Kileleshwa to see that a building boom is underway. How is it being paid for? For John Githongo, a veteran anti-corruption activist, the answer is simple: graft. “The laundering of corruption – and, it is believed, drug trafficking proceeds – has flushed right through our banking systems and is now heavily into real estate,” he tells The Africa Report. 

Perfect marriage

When Sonko unveiled that Polycarp Igathe is his running mate on 17 May, it appeared to be a perfect marriage in the highest circles of the political and business elite. Igathe is the managing director of Vivo Energy, which is the licensee of Shell’s business in 16 African countries. Putting Igathe’s name on the ballot brings significant credibility to Sonko’s promise to “restore Nairobi” by creating jobs and boosting the economy.

Like in most cities, in Nairobi the merger of business and political interests climaxes during election years. Chris Kirubi, the head of private equity giant Centum Investments, is one of the ruling Jubilee Party’s most ardent supporters. Although Kenya’s electoral laws do not require parties to disclose campaign donations, Kirubi is widely said to be among Jubilee’s most important benefactors. As the chairman of Capital FM, the city’s most popular radio station, his influence on the media is also significant. 

Among the key supporters of Kenya’s opposition coalition, the National Super Alliance (Nasa), is S.K. Macharia, who is the owner of Royal Media Services. Macharia claimed that Raila Odinga, Nasa’s presidential candidate, was the real winner of the 2007 presidential elections. He owns a host of radio and television stations, including the popular Citizen TV.

For some businessmen, however, the political arena is the least of their concerns. In the Central Business District, where matatus jostle for space with red-plated SUVs, the sight of crestfallen bank executives has become familiar. Even before a commercial interest cap came into effect last September, something was fundamentally off-kilter about Kenya’s economy.

Partially driven by rising debt obligations to fund infrastructure projects, the country’s economic projections looked fantastic, sometimes even fanciful, for a few years. This is most visible in its vibrant banking sector. Bankers almost always start with talk of better days before speaking in hushed tones about the rising proportion of bad loans – 9.1% by some measures – and falling revenue. The lending cap has triggered credit rationing, especially because it came after three banks went into administration.

A common refrain in Nairobi now, whenever a company announces losses or job cuts, is a sarcastic “the economy is growing”. It is quoting the regime’s constant assurance, whose effects seem to have dissipated in the private sector. 

The UAP Old Mutual Tower, Kenya’s highest building, is 65% empty nine months after its opening. Construction started long before the mini-banking crisis, and investors were already wary about extending in an economy headed for a bruising national election this year.

The Nairobi economy is not creating enough new employment opportunities. “I’ve been looking for a job for three years now – anything, even an unpaid internship,” says Susan Awuor, who has a degree from the University of Nairobi. “I think I’ve walked into every office on this side of town to no avail,” she says, referring to Upper Hill, Kilimani and Westlands – Nairobi’s business hubs.

Unfulfilled promises

In February, the region’s biggest bank by total assets, KCB Group, announced it would fire hundreds of its workers in a bid to reduce its spending by $20m in the next year. That has become Nairobi’s immediate reality, with factories to ­media houses reducing their staff. 

In early April, the Kenyatta government launched an online portal detailing its successes in the past four years. While employment opportunities were some of the most ambitious promises during its election in 2013, they occupy a minor role in its achievements, especially compared with infrastructure. With rising food prices and an economy that tends to slow down in election cycles, the next few years may not be easy. 

On the mezzanine floor of The Hub, the sparkling new mall in the affluent area of Karen, there is a new shop called The Urban African Lifestyle Company. It carries an array of designs, including cotton tube dresses, leather handbags and fish-leather accessories from the Lake Victoria region. At first glance, the store might seem unremarkable. But it represents something of a revolution for Kenyan retail: a new interest among the city’s well-heeled in buying locally made products, and the gradual revival of Kenya’s textile industry, which for decades was drowned out by the flood of second-hand clothing from the West – known as mitumba – and cheap imports from China. 

The shop in The Hub is the brainchild of Katungulu Mwendwa, a Nairobi designer who has shown her work in New York and London. The shop has been a success, and others have followed Mwendwa’s lead: now just about every upscale Nairobi mall has at least one shop dedicated to local designers, including the architectural skirts and blouses of Kepha Maina and Deepa Dosaja’s stretch silk palazzo pants and jumpsuits. Meanwhile, the Nairobi social calendar is crowded with events aimed at quenching this new thirst for Kenyan fashion: upscale craft markets, fashion shows and an annual Fashion High Tea. 

As Sunny Dolat, a Nairobi stylist, explains, Kenyans have been known to favour nondescript Western designs, setting them apart from many other African countries where wax fabrics are popular. But as more Nairobians have entered the middle class, there has been a renewed interest in exploring the local aesthetic and supporting local creativity. 

“I think Kenya, like many other places in the world, had this period where we were really interested in products from the West because they were already validated,” says Dolat. “We’ve had this period where the middle class really grew and so there was a lot more disposable income in the city. So, there is a shift that’s happened in the last couple of years where there is a lot more interest in local product and local content.” 

Fashion brings jobs

Mwendwa’s most recent line of chic, modern dresses and sweaters were cut mainly from Ugandan cotton that was processed by the Kenyan company Tosheka Textiles. The Kenyan Association of Manufacturers estimates the fashion and apparel industry is worth about $330m a year, and the government has put the sector at the heart of its industrialisation programme. According to one estimate, the sector could help generate up to 300,000 jobs, especially among women and young people. 

The middle classes that are driving this consumerism have historically led calls for accountability and social change. In Kenya, according to a 2016 survey by ratings agency Moody’s, they represent around 400,000 households, a third of which live in Nairobi. Compared to a total Nairobi population of nearly 6.5 million, they remain a slight but growing slice of the citizenry. It will be some time before they can weigh on the politics and economics of the city.

And back in Kibera, the middle is notice­ably missing. A heaving illegal power connection buzzes above a community centre where young people are getting training in information and communications technology. Nyambiga, the shop assistant, glances at piles of gravel that are closing in on Makina Ward – a sign that a road will soon cut through his neighbourhood and force everyone out. He sighs, and says his options are limited because he cannot afford the high cost of living in other parts of the city. “We will stay in Kibera. This is where we can sustain the living cost,” Nyambiga says. “We’ve written letters to the government but they just say the road is coming.” 

From the June 2017 print edition 

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